Cheaper heating oil deals blow to Government rural heat pump rollout 

The recent 20% drop in heating oil prices has brought relief to rural UK households, but it has also resulted in a debate on the economic viability of swapping oil boilers for heat pumps. 

A green house icon, showing a house shape made out of bushes.

 While cheaper bills are welcome, investing in a heat pump system must be weighed against other factors, especially for those in remote areas with limited options. 

Figures published today by the Energy and Utilities Alliance (EUA) suggest that households making that decision now will be 70 per cent (nearly £500 a year) worse off with a heat pump than their oil boiler. 

Annual heating cost comparison 

According to the EUA, an average household using a heat pump at the efficiency level used in government trials and paying the Energy Price Guarantee for electricity will spend £1202 on heating. In contrast, the same property that relies on an oil boiler and pays the current market rate for heating oil will spend just £707, an annual saving of £495. 

These alarming numbers raise doubts about the government’s proposal to ban households from installing new oil boilers after 2026, with heat pumps being the preferred alternative for home heating. As per government estimates, the average installation cost of a heat pump is £13,000, which could be a significant burden for many homeowners who are already struggling to make ends meet. 

Mike Foster, CEO of the EUA, said: “Households currently using oil to heat their homes will be shocked to find out that being forced to fit a heat pump will cost them £13,000 up front and then an extra £500 a year for the privilege. It’s an appalling situation that faces those living in rural areas from 2026. 

Cost of living crisis 

“Coming in the middle of a cost of living crisis, cheaper heating oil is welcome relief. But it just reinforces how much more expensive a heat pump would be. I’m not sure the government have thought this through properly. The penalty for being forced off oil simply cannot be afforded. 

“Decision day is looming. The government have said from 2026, if your oil boiler breaks down, it cannot be replaced by a new oil boiler. We know many Conservative politicians share our concerns but their Ministers just aren’t listening. They may need voters in the upcoming local elections to give their judgement on the policy. It might be way they avoid the huge cash penalty coming their way soon.”